Accounting Manual for Departments. The Standard Chart of Accounts and Systems

Transcription

1 Accounting Manual for Departments The Standard Chart of Accounts and Systems

2 Chapter Content 1 Overview Key Learning Objectives Understanding the Standard Chart of Accounts (SCOA) Infrastructure classification Item segment Asset segment Project segment Objective segment Fund segment Responsibility segment Regional segment Understanding the Economic Classification The Basic Accounting System (BAS) Recording of Basic Accounting Transactions Year end closure Bank Reconciliation (BAS / PMG Account) Debtors and Creditors Reconciliation Salaries Reconciliation (BAS / PERSAL) Assets Reconciliation (BAS / LOGIS) Inventory Reconciliation (BAS / LOGIS) The Payments Process PERSAL LOGIS MEDSAS Sundry payments Methods of Payment Page 2

3 13.1 Electronic Fund Transfers (EFT) Cash payments Petty cash Reconciliations Summary of Key Principles Understanding the Standard Chart of Accounts The Basic Accounting System Recording of basic accounting transactions Bank reconciliation (BAS / PMG Account) Debtors and creditors reconciliation Salaries reconciliation (BAS / PERSAL) Assets and inventory reconciliation (BAS / LOGIS) The payments process The receipting process ANNEXURE 1: BAS PROCESSING RULES ANNEXURE 2: BAS REPORTS OF BANK RECONCILIATION ANNEXURE 3: LOGIS REPORTS FOR ASSETS RECONCILAITION AND REPORTING IN THE AFS ANNEXURE 4: LOGIS REPORTS FOR INVENTORY RECONCILAITION AND REPORTING IN THE AFS ANNEXURE 5: UNDERSTANDING THE BAS TRIAL BALANCE ANNEXURE 6: BAS AND SCOA SEGMENTS Page 3

4 1 Overview The purpose of the chapter is to: provide a basic understanding of how the Standard Chart of Accounts (SCOA) is structured; discuss how the Basic Accounting System (BAS) together with the independent stand-alone systems is organised to facilitate transaction processing and reporting; and provide guidance on the basic accounting for transactions in order to demonstrate how the basic accounting equation and double-entry system, dealt with in Chapter on Fundamental Accounting Concepts, works. It also provides guidance on the compilation of some important reconciliation. This chapter does not deal with processes and procedures. Departments can obtain the latest information on the website of SCOA at BAS on on and LOGIS on The Office of the Accountant-General compiles a Modified Cash Standard (MCS), this manual serves as an application guide to the MCS which should be used by departments in the compilation of their financial statements. Explanation of images used in manual: Definition Take note Management process and decision making Example 2015 Page 4

5 2 Key Learning Objectives Understand the composition of the SCOA Understand the BAS General Ledger and other systems where transactions are initiated Understand the payments transaction processing and capture in BAS Understand the receipts transaction processing and capture in BAS Understand how to record basic accounting transactions Understanding the various systems of accounting How to do certain reconciliations 3 Understanding the Standard Chart of Accounts (SCOA) SCOA comprises the coding of items used for classification, budgeting, recording and reporting of receipts and payments within the financial system. It serves to facilitate and systematise the recording of all transactions and is directly linked to the Economic Reporting Format (ERF), in fact, the posting level items roll up to the ERF reporting format. The coding structure comprises eight segments. When recording a transaction, a selection must be made from each of the eight segments. One transaction can thus be broken down into all of the eight different segments. The diagram below illustrates this: When establishing the appropriate classification code from a segment, the following questions arise for each segment. 1. Infrastructure classification: Does the transaction relate to an infrastructure or noninfrastructure asset? 2015 Page 5

6 2. Item segment: What is the nature of the payment and what is the nature of the receipt? 3. Assets segment: Does the transaction relate to an asset or the use of an asset and if so, which class of asset? 4. Project segment: Does the transaction relate to a specific project and if so, what type of project? 5. Objective segment: Against which programme / activity should the transaction be recorded? 6. Fund segment: Against which source of funding should the payment be allocated and against which source should the receipt be allocated? 7. Responsibility segment: To which cost centre should the transaction be allocated? 8. Regional segment: In which region does the service get delivered and in which region is the beneficiary that benefits from the transaction? Each segment is explained in more detail below. 3.1 Infrastructure classification Purpose: To identify whether or not a spending item relates to infrastructure and to show the type of infrastructure it relates to. At the highest level the infrastructure segment distinguishes between expenditure and nonexpenditure (i.e. revenue, assets and liabilities) transactions. Expenditure is then sub-classified into infrastructure, which includes infrastructure project payments and non-infrastructure categories. This provides for a direct link to the reporting requirements as discussed in the Reference Guide to the new Economic Reporting Format (Blue Book) where such distinction is required. The infrastructure segment has been introduced specifically for reporting purposes (Economic Reporting Format - ERF) and it provides a direct link to the reporting requirements as discussed in the Reference Guide to the new Economic Reporting Format (Blue Book) where such distinction - as discussed in the previous paragraph - is required. The infrastructure segment is centrally controlled and standardised for all departments and aligned to the economic classification. The segment is aligned to the Infrastructure Reporting Model (IRM) At the highest level within transactions, spending is disaggregated into seven sub-categories discussed below. Existing infrastructure assets For existing infrastructure assets, there are three types of classifications available: Maintenance and repairs - Includes activities aimed at maintaining the capacity and effectiveness of an asset at its intended level. The maintenance action implies that the asset is restored to its original condition and there is no significant enhancement to its capacity, or the value of the asset. Spending under this classification is of a current nature. Upgrades and additions - Includes activities aimed at improving the capacity and effectiveness of an asset above that of the intended purpose. The decision to renovate, reconstruct or enlarge an asset is a deliberate investment decision which may be undertaken at any time and is not dictated by the condition of the asset, but rather in response to a change in demand and or change in service requirements. Spending under this classification is of a capital nature. Rehabilitation and refurbishment - Includes activities that are required due to neglect or unsatisfactory maintenance or degeneration of an asset. The action implies that the asset is restored to its original condition, enhancing the capacity and value of an existing asset that has become 2015 Page 6

7 inoperative due to the deterioration of the asset. Spending under this classification is of a capital nature. New infrastructure assets A department may purchase a completely new infrastructure asset or have a project to construct new infrastructure. In both cases the expenditure incurred is capital in nature and should be classified under new infrastructure assets. Infrastructure transfers Infrastructure transfers can be either capital in nature or current in nature. Infrastructure transfers capital - This category is relevant when the department makes a transfer of funds that the beneficiary must use either for the construction of new infrastructure; or for upgrades / additions to capital or refurbishment / rehabilitation of existing infrastructure. Infrastructure transfers current - This category is relevant when the department makes a transfer of funds to an entity to cover administrative payments relating to the construction of infrastructure, such as conducting a feasibility study in the construction of a new office building. Administrative costs directly relating to the infrastructure project will only be capitalised once the decision has been made to construct the infrastructure. Therefore records of such costs should be maintained until the final decision on the project is made. It is important to note that departments must record transfers related to infrastructure assets separately from other project related transfers. This is a requirement under the IRM. Payments for financial assets This category caters for concessional loans to other sectors of governments for construction of infrastructure assets. An example will be monies loaned for the construction of the Gautrain and purchases of equity. Infrastructure leases This category caters for both finance leases and operating leases. The category is used to classify the monthly repayment as per the lease agreement. Non-infrastructure This category is specifically for spending not directly related to the construction or purchase of infrastructure assets. Such spending can be either of a current or capital nature. For noninfrastructure assets, there are six types of classifications available: Non-infrastructure: current - This category includes payments relating to stand-alone purchases of goods and services, as well as purchases of goods and services relating to the maintenance and repair of a non-infrastructure asset. It also includes payments relating to non-infrastructure projects of a current nature other than maintenance projects. However it is important to note that assets (major) bought into a current project should be recorded as stand-alone capital assets. Non-infrastructure: capital - This category caters for the purchase of stand-alone capital assets and for projects for the creation of new, and or the upgrading, rehabilitation or refurbishment of existing non-infrastructure assets as well as other non-infrastructure projects of a capital nature. Non-infrastructure: leases - This category caters for both finance and operating leases and is used to classify the monthly payments as per the lease agreement Page 7

8 It is important to note that any maintenance works performed on a leased asset should be allocated against the repairs and maintenance item within the infrastructure segment, for example outsourced maintenance of a leased photocopier will be allocated against the non-infrastructure - maintenance and repairs. Non-infrastructure: Payments for financial assets - Is broken down into stand-alone current as well as stand-alone capital. Non-infrastructure: internal charge - This is for goods and services produced by the department for resale. For example, furniture manufactured by inmates for resale. Non-infrastructure: CARA expenditure -. The account consist of all money derived from the execution and confiscation and forfeiture orders contemplated in terms of this Act, the balance of all moneys derived from the execution of foreign confiscation orders as defined in the International Cooperation in Criminal Matters, Act No 75 of 1996 after payments have been made to requesting States in terms of the Act, any moneys appropriated by Parliament or paid into the account in terms of any other act, domestic and foreign grants, any amount of money received or acquired from any source and all moneys transferred to the Account in terms of the Act. Non-expenditure All posting levels not directly related to payments have been provided for within the non-expenditure category. Non expenditure includes General Account of revenue, general account of a vote, direct charges to rev fund and receipts. Infrastructure refers to fixed structures that are constructed or acquired by the public sector or in partnership with the private sector and whose benefits will accrue to the community at large. This includes government buildings, such as schools, hospitals, clinics, community centres and administrative buildings, as well as roads, communication networks, canals, airports, rail lines, dams and water distribution schemes, electricity, and so on. Government expenditure on housing is seen as a transfer to households and does not fall under the infrastructure definition. It also includes machinery and equipment that was purchased for the exclusive use on an infrastructure project, (i.e. consumed within a project). Other machinery and equipment such as desktop computers, vehicles, laptops, furniture and individual air conditioners etc., do not constitute infrastructure expenditure. All maintenance / repairs, upgrading / extensions and refurbishment / rehabilitation expenditure on infrastructure that prolongs the life, adds value to the asset and/or maintain the value of the asset, should be reported as expenditure on infrastructure. This should not include day-to-day upkeep, such as sweeping or grass cutting. At a lower level, the infrastructure segment requires a further breakdown of the transaction into either one of the following: Own account (part of a project) Outsourced projects (part of a project) Stand-alone current (non-capital items) Stand-alone capital (capital assets) Below are examples of the classification of transactions and how the infrastructure, item and asset segments work together Page 8

9 Example: Infrastructure assets - new acquisition Provincial Department of Public Works (DPW) buys a new office building in Pretoria from Old Mutual Property Investments for R20 million. This transaction will be recorded as follows in SCOA (SCOA extract July 2013): INFRASTRUCTURE SEGMENT Expenditure Infrastructure assets New infrastructure assets New infrastructure assets capital Purchase of new infrastructure capital ITEM SEGMENT Payments Purchase/construction of capital assets Buildings and other fixed structures Buildings and other fixed structures New buildings and other fixed structures New Buildings and other fixed structures ASSET SEGMENT Tangible assets Buildings and other fixed structures Non-residential buildings Office Buildings TPA Building Example: Infrastructure assets - own account DPW construction a new office building in Pretoria on own account. This transaction will be recorded as follows in SCOA (SCOA extract July 2013): INFRASTRUCTURE SEGMENT Expenditure Non-infrastructure current Non-infrastructure current [Payment for compensation of employees - will always be current] 2015 Page 9

10 INFRASTRUCTURE SEGMENT Expenditure Infrastructure assets New infrastructure assets New infrastructure assets capital Construction own capital ITEM SEGMENT Payments Payment Compensation of employees Salaries and wages Remuneration Pensionable Basic salary ITEM SEGMENT Payments Payment Goods and services Consultants and professional services: infrastructure planning Consultants and professional services engineering Consultants and professional services civil engineer Own consultants and professional services civil engineer ITEM SEGMENT Payments Payment Goods and services Inventory materials and supplies Inventory materials and supplies - building and construction materials Own inventory materials and supplies - building and construction materials 2015 Page 10

11 ITEM SEGMENT Payments Payment Goods and services Travel and subsistence domestic Travel and subsistence domestic - accommodation Own travel and subsistence domestic - accommodation ITEM SEGMENT Payments Payment Goods and services Travel and subsistence domestic Travel and subsistence domestic - transport Travel and subsistence - car rental Own travel and subsistence - car rental ASSET SEGMENT Non asset related Non asset related [Payment for compensation of employees] ASSET SEGMENT Tangible assets Buildings and other fixed structures Non-residential buildings Office Buildings TPA Building 2015 Page 11

12 Example : Infrastructure assets - outsourced DPW outsources the construction of a new office building in Pretoria to Thazanya Construction. This transaction will be recorded as follows in SCOA (SCOA extract July 2013): INFRASTRUCTURE SEGMENT Expenditure Infrastructure assets New infrastructure assets New infrastructure assets capital Construction outsourced capital ITEM SEGMENT Payments Purchase/construction of capital assets Buildings and other fixed structures Buildings and other fixed structures New buildings and other fixed structures Outsourced contractor new buildings and other fixed structures ASSET SEGMENT Tangible assets Buildings and other fixed structures Non-residential buildings Office Buildings TPA Building Example: Infrastructure assets - maintenance and repair current Provincial Department of Roads and Transport purchase road construction material to do normal maintenance work on the N4 between Doornpoort Plaza and Rosslyn. This transaction will be recorded as follows in SCOA (SCOA extract July 2013): INFRASTRUCTURE SEGMENT Expenditure Infrastructure assets Existing infrastructure assets Maintenance and repair current Existing infrastructure maintenance and repair: Own account 2015 Page 12

13 ITEM SEGMENT Payments Payments Goods and services Inventory materials and supplies Inventory materials and supplies:building and construction materials Own inventory materials and supplies: building and construction material ASSET SEGMENT Tangible capital assets Building and other fixed structures Other fixed structures Roads National Roads National roads tar N4 toll road Example: Infrastructure classification Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which infrastructure will this transaction be allocated? New Infrastructure Assets Capital, Construction - Own Account. 3.2 Item segment Purpose: To record receipt and payment transactions as well as transactions in assets and liabilities. The item segment identifies the goods, services and other payments to be made in achieving the objective of a department, also commonly referred to as the what government is paying for. The payment categories show what has been bought; or to whom funds have been transferred. Receipts are also classified according to the nature of goods/ services rendered Page 13

14 The high level categories of the item segment are: Receipts - these are the appropriations, departmental revenue etc, as referred to under the fund segment. Assets, liabilities and net assets - this are the balances of the assets, liabilities and net assets as per the statement of financial position. Payments - these are the different types of payments made by the department which is broken down into: Compensation of employees - all payments made to employees of the department are allocated here Personnel Salary system (PERSAL) allowance and deduction codes are aligned / mapped to the SCOA items. This is because the PERSAL system interfaces with BAS. For example: Many different allowance codes are mapped to a single item in SCOA namely Non-pensionable allowances. Goods and services - payments for all goods and services to be used by the department, excluding purchases of capital assets. The item goods and services is broken down into broad product groups, for example, capital assets less than R5 000, inventory, consumables, consultants and professional services, administrative fees and operating payments. All capital assets purchased with a value of less than R5 000 are included under the goods and services classification category and not the purchases / construction of capital assets classification category. Inventories are those goods that are essential for satisfying the service delivery obligation of a department. If the goods don t qualify to be inventory items, they will most likely be consumable items. It is important to note that some of the inventory categories will be blocked and would therefore only be available for use by specific departments or sectors. For example, Military Stores can only be used by the Department of Defence and Health Medicine can only be used by the Department of Health. Refer to the SCOA s website where more details can be obtained on this. This category includes all administration related fees inherent to the administration of the department. It includes travel agency fees, personnel agency fees, bank charges, etc. Operating payments include items relevant to the day-to-day operation of the department and typically include goods and services that do not meet the classification criteria for other major spending categories. Examples are cleaning services, courier and delivery services, resettlement costs, roadworthy tests, school boarding costs, storage of files and assets, air, freight, harbour services, printing and publications, protective and special clothing, and costs for witnesses. Only lease payments for operating leases are included under the goods and services classification category. Payments for finance leases are included as part of the purchases / construction of capital assets classification category. The department should recognise the actual lease payments made during the financial year as capital expenditure in the statement of financial performance Transfers and subsidies - Transfers include all unrequited payments made by the government unit to another institutions, businesses and individuals, it does not constitute final expenditure by the department. Subsidies are unrequited payments that government makes to public corporations and private enterprises, these payments usually have a direct policy outcome, either by subsidizing the price of goods and services or by influencing the level of production. A payment is unrequited provided that the government unit does not receive anything directly in 2015 Page 14

15 return for the transfer to the other party. Transfers and subsidies encompass both current and capital transfers. Current transfers include social security benefits paid to households, fines, penalties, compulsory fees paid by reporting unit and compensation for injuries or damages paid to another unit. Capital transfers include conditional payments provided to a government unit for purchasing new capital assets, transfers to enterprises to cover large operating deficits or finance their purchases of capital assets, debt forgiveness (cancellation of a debt by mutual agreement between two parties) and capital taxes paid to other government units. Purchases / construction of capital assets - payments for capital assets which are goods that are expected to be used during more than one reporting period and from which future economic benefits or service potential are expected to flow, provided their value exceeded the capitalisation threshold, currently R5 000, when originally purchased. This item classification category represents only part of the total of payments for capital assets as it is identified in the economic classification. The item, payments for capital assets, as recorded in the economic classification is derived from the infrastructure segment, and not from the item segment. Thus, the purchases / construction of capital assets classification category in the item segment should not be confused with payments for capital assets as identified in the budget documentation of departments. In the item segment, purchases / construction of capital assets should be used for certain purchases of capital assets, mainly in the following situations. o When a stand-alone item of a capital nature is purchased, for example a vehicle, the transaction is recorded as a non-infrastructure - capital payment in the infrastructure segment and as purchases / construction of capital assets in the item segment. Under both the infrastructure and item segments the transaction will furthermore be allocated as a standalone capital item. o When a project of a capital nature is undertaken, for example, the building of a new classroom, the transaction is recorded as an infrastructure - capital payment in the infrastructure segment and as purchases / construction of capital assets in the item segment. Under both the infrastructure and item segments the transaction will furthermore be allocated as a stand-alone capital item. Under both the infrastructure and item segments the transaction will furthermore be allocated as either own account or outsourced projects depending on whether the department incurs the project on its own or outsources it to a contractor. The purchases / construction of capital assets classification category should not be used when paying for labour (compensation of employees) or goods and services. Instead, the appropriate posting level under either the compensation of employees or goods and services classification category should be selected and will further be allocated as either stand-alone capital or standalone current depending on whether the project is of a capital or current nature. However when goods and services items are used as inputs into a capital project undertaken on own account, it will not be classified as stand-alone but as purchases / construction of capital assets. Major capital assets used for multiple projects or used in maintenance projects should be classified as stand-alone purchases. Remember that finance lease payments are included as part of this classification category and that the finance lease payment item includes the capital portion and the interest portion of financial lease payments. Therefore there is no need to split the capital and interest portions Page 15

16 Both the item and asset segments have accounts relating to capital asset classes. For example, when departments buy stand-alone capital assets and when an outside contractor undertakes a capital project on behalf of a department, the entries are very similar in the two segments. However, the entries differ in some situations, one example is provided below. Under the item segment the purpose is to record the immediate use of funds. Therefore, for example payments relating to a capital project for the construction of a capital asset, such as payments on salaries and good and services are classified as compensation of employees and goods and services and not as payments for capital assets as would be done in the asset segment where the asset type is specified. This reflects the ultimate use of the funds. Similarly the allocation under the economic classification will also be different, here the purpose is (similar than that of the asset segment) to record the ultimate use of funds - namely the construction of a capital asset. The economic classification entry is then also payments for capital assets, where the asset class is sourced from the asset segment only. For more detail on understanding the economic classification and the relationship of the segments of the SCOA to the economic classification, refer Similar to the infrastructure segment the item segment requires a further breakdown of the transaction into: Own account (part of a project) Outsourced projects (part of a project) Stand-alone current (non-capital items) Stand-alone capital (capital assets) During the 2012/2013 financial year the SCOA Technical Committee introduced Own account and Outsourced classification principles. The Own account item was created as PRJ (project) items. The previous PRJ items have been renamed to OWN items, to eliminate the confusion between the PRJ items in the item segment and the project segment. The prefix OWN and OUTS will now be used to distinguish between Own Account and Outsourced items respectively. In short, OWN items are used when a department undertakes an activity using its own inputs (e.g. personnel, materials etc.) whereas OUTS items are used when a department outsources the activity. An activity is outsourced when the department appoints a third party to carry out specific projects on its behalf. In understanding this concept a distinction should be made between ad hoc contracting out and outsourcing. Contracting out involves short-term assignment or specific projects whereas outsourcing involves appointing one or more entities to take responsibility for a function or process mainly related to infrastructure projects for which the department remains accountable. Furthermore outsourced projects usually take a longer period of time to complete and often span over financial years. The following, individually or in combination, could indicate the department has outsourced the project: The department is not involved in the purchase of materials used as inputs to the project. The project is fully carried out by the service provider and the department is only responsible for management of that project. The third party only delivers the final product at the end of the project Page 16

17 Single payment or a series of payments of the entire project are made to the service provider. In some instances a department appoints multiple contractors with specific skills and responsibilities required to complete the project. This will not imply that the project as a whole is not outsourced. An activity is carried out on own account when the department purchases all the necessary inputs and uses its own resources (e.g. staff and equipment) to plan, implement, and execute the activity. Unlike outsourced projects, the department takes full responsibility for the inputs, processes and ultimate delivery of the project outputs. Inputs into the project may include the appointment of professional services such as engineers, architects, project managers, materials, etc. Inputs also include small outsourced projects. For example, the construction of a laboratory outsourced to a private firm forming part of a school building project which is implemented by the department on own account. Example: Item segment - payments Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which item will this transaction be allocated? Goods and Services, Inventory: Materials and Supplies. 3.3 Asset segment Purpose: To identify asset classes to which a transaction is allocated when the purpose relates to an asset or the use of an asset. This segment in combination with the infrastructure and item segment provides economic classification. The economic classification is now derived from the combination of accounts in the infrastructure and item segments, with the asset segment providing additional information on the type of capital asset constructed or utilised in the transaction or project. The asset segment provides information relating to specific assets and is useful in construction and maintenance contracts. This segment is breakdown allowed so that departments can create their own assets according to their needs. The asset segment is aligned with financial statements and asset registers. While the asset segment is the most important source of information for compiling the asset register, there is no one-on-one relationship with the asset register. Both the item and asset segments have accounts relating to asset classes. For example, when departments buy stand-alone capital assets and when an outside contractor undertakes a capital 2015 Page 17

18 project on behalf of a department, the entries are very similar in the two segments. However, the entries differ in some situations. The asset segment is divided into a number of different asset classes, with the high level categories being tangible capital assets and intangible assets. The category tangible capital assets consists of the following asset classes: buildings and other fixed structures machinery and equipment heritage assets specialised military assets biological assets land and sub-soil assets The category intangible capital assets consist of a single main item: software and intangible assets There is no leased assets category under the asset segment. Allocating leased assets will be done in the item segment under the relevant categories of purchases / construction of capital assets. Departments should use the tangible capital assets category to allocate transactions relating to operating leases. Example: Asset segment Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which asset will this transaction be allocated? Buildings & Other Fixed Structures, Health Assets, Hospitals. 3.4 Project segment Purpose: To identify whether or not a payment is part of a project. Under this segment departments are encouraged to name the project entered into. The project segment identifies projects within a department, allowing for the allocation of all payment items to projects. This is a change from previous years, the project segment should now be used for listing of projects. For purposes of detailed reporting on infrastructure, individual projects will be linked to the appropriate reporting categories in the infrastructure segment, such as the split between current and capital Page 18

19 Provision has been made for recording of research and development (R&D) expenditure for both projects and stand-alone transactions. The project segment only has two main levels to choose from: 1. Projects 2. No projects (stand-alone) These are discussed below. Projects A project is a collection of tasks to achieve a certain goal. Example: the construction of a new road. Normally projects are related to capital assets. Examples: building a new road or upgrading the existing one; adding to an existing building. A project may consist of only one single contract. Examples: the outsourcing to a single provider of a road construction; or to numerous service providers together constituting a project, such as separate contracts with an electrician, a plumber and builder contracted to complete a maintenance project related to a school. Stand-alone items Note: When a department performs normal maintenance, for example, replacing a light bulb, painting an office room or repairing carpets (by the employees within their establishment), the acquisition of material and supplies to be used on an ad-hoc basis should be classified as consumables and not purchases / construction of capital assets. No financial transaction takes place when the employees eventually perform repairs and maintenance. If an external firm carries out repairs and maintenance, the contractors, maintenance and repairs item under the property payments category should be used when payment is made. Expenditure on stand-alone items occurs when government buys individual goods or services from outside suppliers / providers, provided that such purchases are not part of a project. Examples: a department buying computers or vehicles, not part of a project, constitutes expenditure on stand-alone items; a department paying an institution to train government employees is expenditure on a stand-alone item. Example: Project segment Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which project will this transaction be allocated? Projects, Project*. The department should name the project Page 19

20 3.5 Objective segment Purpose: To identify the programme / activity against which any given transaction should be recorded. The segment reflects a department s programme and subprogramme structure in as much detail as is required both for reporting and management purposes. In terms of the requirements of the Public Finance Management Act (PFMA), funds are appropriated by programme (or main division within a vote). The objective segment is also used to derive the functional classification of government expenditure at a detailed sub-programme or activity level. Example: Objective segment Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which objective will this transaction be allocated? XXX Province, DPW, Public Works Infrastructure. 3.6 Fund segment Purpose: To identify the source of funding from which payments are effected, and the nature of receipts. The fund segment is also used to record receipts collected by departments for the rendering of services, delivery of goods and other funds received within the normal course of operations, i.e. departmental own revenue. The main source of funding is from annual appropriations which consist of the following: Voted funds discretionary is the main source of funds available to departments. These funds are allocated through the annual appropriation by Parliament/Legislature per the Appropriation Act and the Adjusted Appropriation Act and are used to finance the annual operating activities of departments. Voted funds can be discretionary or earmarked and specific funds Page 20

21 Earmarked and specific funds are items identified in the departmental allocation letters as earmarked funds, as well as amounts appropriated as specifically and exclusively appropriated in the Appropriation Act and the Adjusted Appropriation Act. Conditional grants are allocations to provinces and municipalities from national government s share of nationally raised revenue, which are conditional on certain services being delivered or on compliance with specified requirements. Any other expenditure not relating to earmarked and specific funds or conditional grants is recorded against voted funds discretionary. The SCOA is updated annually to be aligned with the published Appropriation and Division of Revenue Acts for the specific year. The assets and liabilities section in the fund segment provides for interdepartmental transactions at national and provincial level and transactions relating to assets and liabilities. Example: Fund segment Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which fund will this transaction be allocated? Departmental Appropriation, Voted Funds Discretionary, Voted Funds. 3.7 Responsibility segment Purpose: To identify the cost centre of any given transaction. As the location of cost centres various across departments, depending on their organisational structure, this segment is not standardised and the departments maintains the segment. The responsibility segment identifies the cost centre in the department s organisational structure, i.e. who takes responsibility and requires the funds for spending and accounting purposes. The responsibility segment identifies the particular unit of the department, such as an office, a school or a hospital clinic. Normally it includes a responsibility manager and a group of employees, who are responsible for certain activities. The responsibility segment is the only remaining non-standardised segment. This is because the responsibilities are identified according to the needs of a department. Therefore departments need to amend the structure according to their needs in terms of the requirements of their organisational structure. Note that objectives explain what needs to be done while responsibilities identify who is responsible for the specific task / service. There is not always a one to one relationship between a responsibility and an objective. The SCOA provides the facility for individuals in one particular responsibility to work one or more objectives within a department Page 21

22 Example: Responsibility segment Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which responsibility will this transaction be allocated? The department should create own responsibilities under Departmental Responsibilities. 3.8 Regional segment Purpose: To identify which region benefits from government spending. The regions are defined in great detail, down to individual municipalities and sometimes even to wards, depending on the necessity of this detail and the arrangement between departments and the relevant treasuries. Note that the regional identifier segment identifies the beneficiary of the amounts spent. The beneficiary may differ from the department incurring the payments. The regional segment is only relevant for payment transactions. Notwithstanding this fact, all transactions must be posted to a segment. Transactions in receipts and assets/liabilities should be posted to the item: No payments: No regional identifier. The regional segment, on the other hand, identifies the geographical location of the beneficiary of the service delivery or recipient of goods. Example: Regional identifier segment Provincial Department of Public Works (DPW) purchases bricks for the construction of a new hospital in the province. The invoice is paid using departmental appropriation, voted funds discretionary and is allocated against Programme 2 Public Works and the relevant Region cost centre. Against which region will this transaction be allocated? Regional Identifier, Region: Provincial, XXX, XX: Municipalities, XXX Page 22

23 Consolidated answer to the examples: Infrastructure: Item: Assets: Project: Objective: Fund: Responsibility: Regional identifier: New Infrastructure Assets Capital, Construction - Own Account Goods and Services, Inventory: Materials and Supplies Buildings & Other Fixed Structures, Health Assets, Hospitals Projects, Project (the department to indicate the name of the project) XXX Province, DPW, Public Works Infrastructure Departmental Appropriation, Voted Funds Discretionary, Voted Funds XXX Regional Identifier, Region: Provincial, XXX, XX: Municipalities, XXX In summary, a transaction is complete once a selection is made from each of the eight segments. The information generated per transaction is important for decision making and accountability purposes. 4 Understanding the Economic Classification As described in the first part of this guideline, the Economic Reporting Format (ERF) provides for the presentation format of government payments and receipts. It shows the way in which payments and receipts are presented in the budget, and in-year and year-end financial reports of government units. In order to record and report transactions, the SCOA must provide for all relevant aspects of the economic classification within the ERF. As it is not possible to do this within a single dimension of the chart, SCOA provides for the implementation of the economic classification across three different segments, namely: 1. Infrastructure segment; 2. Item segment; and 3. Asset segment. The structure of the economic classification is very similar to that of the item segment. For the final results, there are also many similarities between the numbers in the economic classification and item segment. It is therefore not surprising that the item segment contributes importantly to the economic classification. The economic classification is derived from the combination of accounts in the infrastructure and item segments, with the asset segment providing additional information on the type of asset constructed or utilised in the transaction or project. This is best explained by an example. If bricks are bought as part of the construction of a new school building, the payment made will be classified as an infrastructure project payment, i.e. capital payment, since the transaction forms part of a project to construct a building. However, the bricks are as part of goods and services on the item list, which would result in such items being classified as current payments if bought as stand-alone items. However, the intended purpose, or ultimate use, of buying the bricks is to construct a capital asset, i.e. building and therefore the transaction should be classified as capital payments - own-account construction in terms of the economic classification. This is done by linking the transaction to the asset class Buildings and other fixed structures in the asset segment and allocating the transaction to a capital project in the infrastructure segment. In the item segment, each transaction is recorded according to the immediate use of funds, without taking into account its ultimate use. In the infrastructure and asset segments, on the other hand, the ultimate use of the funds prevails. For example, if a government unit engages in a capital project to build a new road, the ultimate use of the funds is to create a new capital asset, in this case a road Page 23

24 To achieve this, it must pay for labour and materials during the construction phase; these payments represent the immediate use of the funds. In the economic classification, where the ultimate use of funds is recognised, both entries are classified as payments for capital assets, buildings and other fixed structures. However, the entries in the item segment reflect the immediate use; thus, compensation of employees and goods and services are recorded. Thus, the immediate use provides for the description of the item being bought and refers to its actual form. The ultimate use, on the other hand, defines the eventual purpose for which the item being bought will be used. For the ultimate use, the eventual or intended use of the item is considered, and not the form of the item being bought. In terms of economic classification the following items are used to present payments: Current payments Compensation of employees Goods and services Interest and rent on land Financial transactions in assets and liabilities Transfers and subsidies Provinces and municipalities Departmental agencies and accounts Universities and technikons Public corporations and private enterprises Foreign governments and international organisations Non-profit institutions Households Payments for capital assets Buildings and other fixed structures Machinery and equipment Cultivated assets Software and other intangible assets Land and sub-soil assets 5 The Basic Accounting System (BAS) BAS is the core of government accounting systems; it is the general ledger where all transactions are recorded and classified in accordance with the principles of the SCOA and is the main source of information for the preparation of management reports and the departmental financial statements. For detail processes and procedures, the departments must regularly make reference to the BAS website at for all updated documents and training manual 2015 Page 24

25 Transaction processing originates from transactions processed on BAS itself and also from independent stand-alone systems that interface with BAS before they are captured in the general ledger. An important internal control measure is to reconcile information in the independent standalone systems to BAS to ensure that transactions processed in the former are captured (i.e. interfaces) correctly in BAS. The various independent stand-alone systems interface with BAS, from where expenditure transactions are initiated are depicted below, for example PERSAL, LOGIS, MEDSAS, etc. All payments are disbursed in BAS, except for PERSAL. There are exceptions where payments are captured directly in BAS and not via an independent stand-alone system. These are referred to as sundry payments and are NOT recommended. Sundry Payments should be limited to only payments that don t require purchase orders. 6 Recording of Basic Accounting Transactions Accounting transactions are the components of a system that keeps track of the flow of money or funds. In accounting, all money that flows in or out of a department must be recorded. Accounting transactions are recorded according to the principle of a debit being recorded in one account and a corresponding credit being recorded in another account. Financial transactions must be captured by a department, in order to assist the department to manage its operations efficiently and effectively, to assist with the financial planning and budgeting and to ensure economic, efficient and effective service delivery to the public. Furthermore, financial transactions form the basis for the compilation of financial statements at the end of each financial year that report to the public how the department spent public money. Accounting can thus be seen as the process of identifying, measuring and communicating information to different stakeholders. Due to the latter, it is of the utmost importance that financial transactions are recorded timeously (cutoff), that all financial transactions are recorded (completeness), that transactions are recorded at the correct amount (accuracy), in the correct account (classification) and that goods and or services have either been received or given for the transactions recorded and they are supported by adequate documentation (occurrence). In order to ensure the above, reconciliations of departmental bank accounts, assets, accounts receivable and accounts payable must be done on a regular basis in accordance with National Treasury s guidance. An efficient and effective system of internal control is the cornerstone of a sound accounting system. This includes a filing system for all supporting documentation, proper and regular reviews, and segregation of duties amongst finance staff. A financial transaction is an agreement, communication, or movement carried out between two parties to exchange an asset or service for payment. In some instances the other party does not exchange an asset or service and still receives payment. This is called a non-exchange transaction. It is still a transaction if you exchange the goods at one time, and the money at another. This is known as a two-part transaction, part one is receiving the goods or services; part two is giving the money Page 25

26 Below are examples of recording of basic accounting transactions in order to demonstrate how the basic accounting equation and double-entry system, dealt with in Chapter on Concepts and Principles of the Accounting Manual, works. Example: Cash purchase of a motor vehicle to the value of R The department s assets, liabilities and net asset will be affected as follows: The cash in the bank decreases and the capital expenditure increase. The transaction therefore affects the assets and the expenditure of the department. Bank (asset) Capital Expenditure Cr Dr Increase Decrease Increase Decrease Example: Payment of electricity bill amounting to R1 500 The department s assets, liabilities and net assets will be affected as follows: The cash in the bank decreases and the expenditure incurred increases. An increase in expenditure means a decrease in surplus, which means a decrease in liabilities since the surplus to be surrendered will be lower. Thus, to balance the accounting equation, a decrease in assets will always result in a decrease in net assets, unless the other leg of the transaction is assets or liabilities. Bank (asset) Cr 1,500 Dr 1,500 Current Expenditure Increase Decrease Increase Decrease 6.1 Year end closure Example: Cash sale of goods to the value of R The department s assets, liabilities and net assets will be affected as follows: The cash in the bank increases and the revenue generated increases. An increase in own revenue means an increase in surplus. This needs to be surrendered to the Revenue Fund of which will lead to an increase in liabilities. Thus, to balance the accounting equation, an increase in assets will always result in an increase in net assets, unless the other leg of the transaction is assets or liabilities. Bank (asset) Own Revenue Dr Cr Increase Decrease Decrease Increase At the end of each financial year the revenue and expenditure accounts are closed off and these accounts will start with zero balances at the beginning of the next financial year Page 26

27 On the other hand, all asset and liability accounts will be reconciled and balances are carried forward to the next financial year. Thus, as an example, the balance of the department s bank account as at 31 March will be the opening balance of the department s bank account as at 1 April. 7 Bank Reconciliation (BAS / PMG Account) Payments and deposit recorded in the cashbook must, as a minimum, be reconciled to the bank statement at the end of each month. The Treasury Regulations prescribe that bank reconciliations must be performed daily. Bank reconciliation is therefore the comparison of the cashbook balance (per BAS) and the bank statement balance. The Bank Reconciliation Functional Area within BAS provides an automated facility to reconcile the Cash Book balance with the Bank Balance, as per Bank Statement. The actual Cash Book balance of the Department should at all times agree with the Bank balance. Any discrepancies should be investigated. 8 Debtors and Creditors Reconciliation Just as it is important for the department to reconcile the receipts and payments to the cashbook, it s also important to reconcile the debtor and creditor payments and receipts with the supporting documentation. The Debtors Reconciliation Functional Area within BAS provides an automated facility. Therefore only Creditors reconciliation is manually performed. It is good practice to reconcile the balance of the creditors (accounts in BAS or other reports) to the balance as per supporting documentation on a monthly basis. Steps to follow when performing creditors reconciliations: Start with the closing balance of the previous month. Include all the purchases which the department made during the month. The purchases need to be included with reference to the invoice number to ensure that the information agrees to the supplier s information. Deduct all the payments which the department made to the supplier during that month. The invoice which was paid, as well as the payment date and reference need to be included in the reconciliation to ensure that any discrepancies are followed up. Calculate the closing balance based on above. Agree the closing balance as per the records of the department to the closing balance as per the creditor s monthly statement. Follow up any differences. In the case of other creditors, review the cashbook for any payments made to and received by other departments or entities. Prepare confirmation letters asking the relevant department or entity to state if they agree / do not agree with the balance outstanding at a specific point in time. Follow up any discrepancies between the balances as per the department s records and that of the supplier / creditor. 9 Salaries Reconciliation (BAS / PERSAL) The Personnel Salary system (PERSAL) is the payroll system that performs all personnel transactions. All salaries and allowances are paid through PERSAL and deductions are made directly 2015 Page 27

28 from employee s salary. PERSAL assembles the information and makes it available to interface into BAS. Users should check accuracy of the payroll postings because BAS does not initiate all payroll transactions. Departments should not capture salaries information on BAS and no payment should be made directly on BAS. 10 Assets Reconciliation (BAS / LOGIS) As per the PFMA, the accounting officer of the department is responsible for the management and safeguarding of the assets; it is therefore important that the department maintains an asset register to ensure that the department records where all the assets are located and what the value is of those assets. The Logistical Information system (LOGIS) is the independent stand alone system used in the supply chain process for the procurement of goods and services, including capital assets. LOGIS is designed to administer stores, monitor stock levels and provide an asset and inventory management facility (i.e. asset registers). The information included in the asset register should be used to complete the notes in the financial statements. It is best practice for the department to perform monthly reconciliations between the information included in the asset register (LOGIS) and the information included in BAS to ensure that the information on the assets agrees. 11 Inventory Reconciliation (BAS / LOGIS) Similarly to assets the accounting officer of the department is responsible for the management and safeguarding of inventory; it is therefore important that the department maintains an inventory register or list to indicate where all inventories are located, the quantity on hand and what the value is of those inventories. This should be maintained for all locations where inventory is kept. Items remain part of inventory until such time as they are consumed no matter if they are issued from one store to another in a different location. 12 The Payments Process When capturing payments in the general ledger a standard process is followed. The accounting entries will change depending on the payment method. (e.g. debit order, electronic bank transfer etc.) or the type of expense (e.g. PERSAL, LOGIS, MEDSAS etc.) PERSAL The Personnel Salary system (PERSAL) is the independent stand-alone system used for collection and recording all employee related information such as leave records, personal information, medical aid benefits and taxation information. PERSAL is also the payroll system that calculates the monthly salaries and deductions for all employees. These transactions are recorded in the general ledger as compensation of employees. When payments are processed through PERSAL the individual transaction is interfaced to BAS via Transaction Processing Rules Page 28

29 Note that all personnel costs should be transacted through PERSAL. The processing of personnel payments directly through BAS is NOT recommended LOGIS The Logistical Information system (LOGIS) is the independent stand alone system used in the supply chain process for the procurement of goods and services. The system is designed to administer stores, monitor stock levels and provide an asset and inventory management facility (i.e. asset register). It provides information on inventory received and paid in current financial year, inventory donated, etc 12.3 MEDSAS MEDSAS is used for the procurement and management of pharmaceutical products (mainly medicine). This independent stand alone system is used by the Health departments and their trading entities where applicable Sundry payments A sundry payment is a method of payment whereby payment can be made for goods and services for which no order was placed. BAS provides the facility to capture sundry payments from an invoice or relevant source document. Sundry payments can only be made to suppliers that are registered as entities on BAS. Sundry payments are not recommended; they should only be utilised in exceptional circumstances Page 29

30 13 Methods of Payment When departments pay money in respect of goods or services received, it is part of the procurement process which concludes when payments are processed for the goods or services received. The preferred method of payment is electronic payments. Each method of payment has its own payment process and procedure. However, the details of such internal processes are not explained here as the various banking institutions may have different requirements and reports associated with the methods of payment. Departments and the relevant treasuries internal processes and procedures for the methods of payment may therefore differ depending on their relationship with the relevant banking institution. The preferred methods of payment are discussed below Electronic Fund Transfers (EFT) Electronic payments are preferred and the majority of payments are made electronically because it is a secure payment method. Cash or cheque payments are the exception and should be avoided Cash payments Cash payments must be avoided. Where the exception arises, the payment must be carefully administered by the relevant Treasury and the bank. An exception would be cash payments made from petty cash which is discussed below Petty cash The purpose of petty cash is to have a reasonable amount of cash on hand to pay small expenses as a result of the day-to-day operations of a department. 14 Reconciliations In the sub-systems discussion above reconciliations were referred to throughout. Reconciliations are important as internal control measures and sound cash management practices Page 30

31 15 Summary of Key Principles This chapter provides a basic understanding of how the Standard Chart of Accounts (SCOA) is structured and how the Basic Accounting System (BAS) together with the stand-alone systems, is organised to facilitate transaction processing and reporting. It also provides guidance on the basic accounting for transactions in order to demonstrate how the basic accounting equation and double-entry system, dealt with in Chapter on Concepts and Principles, works Understanding the Standard Chart of Accounts SCOA comprises the coding of items used for classification, budgeting, recording and reporting of receipts and payments within the financial system. It serves to facilitate and systematise the recording of all transactions and is directly linked to ERF, in fact, the posting level items roll up to the ERF reporting format. When recording a transaction, a selection must be made from each of the eight segments. The segments are: 1. Infrastructure 2. Item 3. Assets 4. Project 5. Objective 6. Fund 7. Responsibility 8. Regional identifier 15.2 The Basic Accounting System BAS is the core of government accounting systems; it is the general ledger where all transactions are recorded and classified in accordance with the principles of the SCOA and is the main source of information for the preparation of management reports and the departmental financial statements. Transaction processing originates in independent stand-alone systems before they are captured in the general ledger. An important internal control measure is to reconcile information in the subsystems to BAS to ensure that transactions processed in the sub-systems are captured correctly in BAS. The systems referred to above most commonly used are LOGIS, PERSAL and MEDSAS Recording of basic accounting transactions Accounting transactions are recorded according to the principle of a debit being recorded in one account and a corresponding credit being recorded in another account Bank reconciliation (BAS / PMG Account) Bank reconciliation is the comparison of the cashbook balance (accounts per BAS) and the bank statement balance (per PMG Account) at regular intervals. BAS provides automated bank reconciliation functionality. Differences between these balances must be investigated and explained Page 31

32 15.5 Debtors and creditors reconciliation The Debtors Reconciliation Functional Area within BAS provides an automated facility. Therefore only Creditors reconciliation is manually performed Salaries reconciliation (BAS / PERSAL) The Personnel Salary system (PERSAL) is the payroll system that performs all personnel transactions. All salaries and allowances are paid through PERSAL and deductions are made directly from employee s salary. PERSAL assembles the information and makes it available to interface into BAS Assets and inventory reconciliation (BAS / LOGIS) An assets or inventory reconciliation is the comparison of the information as per the LOGIS system, the asset or inventory register and the information as per the BAS system on a monthly and yearly basis. Differences between these balances must be investigated and explained The payments process When capturing payments in the general ledger a standard process is followed. The accounting transaction differs depending on the payment method selected. bank transfer etc.) or the type of expense (e.g. PERSAL, LOGIS, MEDSAS etc.). PERSAL is the independent stand-alone system used for collection and recording all employee related information such as leave records, personal information, medical aid benefits and taxation information. LOGIS is the independent stand-alone system used in the supply chain process for the procurement of goods and services. MEDSAS is used for the procurement and management of pharmaceutical products (mainly medicine). This independent stand-alone system is used by the Health departments and their trading entities where applicable The receipting process The main types of receipts are annual and statutory appropriation and departmental revenue. For the processing of receipt of annual appropriation (voted funds and conditional grants), into BAS, two accounts are important. The exchequer grant account and the general account of the vote. The exchequer grant account informs the department of the funds available in the relevant revenue fund for withdrawal. The general account of the vote informs the department of the total funds available for a particular financial year. The balance in this account represents the total budget for the department per Fund. For the processing of receipts of departmental revenue into BAS, the general account of revenue is important. The general account of revenue consists of the monthly pay-overs of revenue to the relevant revenue fund Page 32

33 ANNEXURE 1: BAS PROCESSING RULES BAS has defined processing rules that determine how it collects, processes and responds to information. To understand these processing rules, it is important to be familiar with the following terms: Functional area: the logical split of BAS functionalities into groups. Transaction type: pre-defined rules per functional area that identifies where the transaction is derived from. For example: AP: Accounts payable (Sundry Payments transactions) BR: Bank Reconciliation (Bank interfaced transactions) CR: Cash Receipts (Cash Receipts transactions) GJ: General Journal (General Journal transactions) DB: Disbursements (Disbursement transactions) CL: Commitments and Liabilities (Creditor Payments transactions) PS: PERSAL (Transactions interfaced from Personnel System: PERSAL) Three types of processing rules have been defined, namely: 1. Transaction Processing Rules (TPR) Used to process transactions that have been defined according to transaction type and in accordance with the predefined allocations associated with that transaction type. Configured to indicate the fixed debit and/or credit leg(s) of a financial transaction. Ensures that the basic accounting principles are adhered to e.g. debits are equal to credits. Minimises the incidence of user errors. 2. Item Function Rules (IFR) Restricts user access to certain Item Segment Details. A user will only be able to post transactions to the Debt Account by using the Debt Functional Area and if the user should select the General Journals Functional Area, the user will not be able to see the Debt Account. 3. Item Processing Rules (IPR) Links matching fields (additional components of allocations) to specific items allowing for grouping of individual transactions to facilitate reconciliation Page 33

34 ANNEXURE 2: BAS REPORTS OF BANK RECONCILIATION Bank reconciliation report (BAS extract July 2013): 2015 Page 34

35 ANNEXURE 3: LOGIS REPORTS FOR ASSETS RECONCILAITION AND REPORTING IN THE AFS Balancing sum - major assets on asset reporting: Balancing sum - Major assets Opening Balance as at 31 March 20x0 Add: Additions (Less): Disposals Add/(Less): Adjustments (Less): Net Subsidiary Issues Add/(Less): Net Internal Transfers Closing Balance as at 31 March 20x1 Reports to use RY0A3 - beginning of period RY0A4 - Major Assets Additions RY0A5 - Major Assets Disposals RY0A6 - Major Assets Adjustments RY0A7 - Major Assets Subsidiary Issues RY0A9 - Major Assets Internal Transfers RY0A3 - Major Assets Closing Balance Balancing sum - minor assets on asset reporting: Balancing sum - Minor assets Opening Balance as at 31 March 20x0 Add: Additions (Less): Disposals Add/(Less): Adjustments (Less): Net Subsidiary Issues Add/(Less): Net Internal Transfers Closing Balance as at 31 March 20x1 Reports to use RY0M3 - beginning of period RY0M4 - Minor Assets Additions RY0M5 - Minor Assets Disposals RY0M6 - Minor Assets Adjustments RY0M7 - Minor Assets Subsidiary Issues RY0M9 - Minor Assets Internal Transfers RY0M3 - Minor Assets Closing Balance Reporting of an individual store: Include internal transfers within the same department for management and audit purposes. Calculation: RY0AM3 ( opening ) + RY0AM4 - RY0AM5 +- RY0AM6 - RY0AM7 +- RY0AM9 = RY0AM3 ( closing ) Financial statement s reporting: Only net internal transfers within the same department should be included in the asset movement calculation. Calculation: RY0AM3 ( opening ) + RY0AM4 - RY0AM5 +- RY0AM6 - RY0AM7 - (+- Net RY0AM9) = RY0AM3 ( closing ) Below are extracts from the LOGIS reports listed above, with breakdowns on what they are made up of Page 35

36 Layout for Report RYAM4 Asset Register Additions (LOGIS extract July 2013): Layout for Report RYAM5 Asset Register Disposals (LOGIS extract July 2013): 2015 Page 36

37 Layout for Report RYAM6 Asset Register Adjustments (LOGIS extract July 2013): Layout for Report RYAM7 Asset Register Subsidiary Issues (LOGIS extract July 2013): 2015 Page 37

38 Layout for Report RYAM9 Asset Register Internal Transfers (LOGIS extract July 2013): Layout for Report RY0A3 - Major Asset Register Closing Balance (LOGIS extract July 2013): 2015 Page 38

39 Layout for Report RY0A4-1 Major Asset Register Cash Additions (LOGIS extract July 2013): Layout for Report RY0A4-2 Major Asset Register Non-Cash Additions (LOGIS extract July 2013): 2015 Page 39

40 RY0A4 Major Asset Additions Breakdown Major Asset Additions = Cash Additions (RY0A4-1) + Non-Cash Additions (RY0A4-2) Cash Additions (RY0A4-1) = Cash Payment: Assets Received and paid in Current Financial Year (FY) + Cash Outstanding: Assets Received but not yet Paid + Cash Sundry: Extra Ordinary Receipt of Assets from Supplier + Cash Transfer In: Assets Received from External Store + Petty Cash: Assets Received and Paid with Petty Cash Non-Cash Additions (RY0A4-2) = Non-Cash Donation: Assets Received as Donation + Non-Cash In Kind: Assets Received for Free or Without Price + Non-Cash Transfer In: Assets Received from External Store - Non-Cash: Assets Return to Supplier - Non-Cash: Assets Return to External Store Layout for Report RY0A5-1 Major Asset Register Disposals Sold for Cash (LOGIS extract July 2013): 2015 Page 40

41 Layout for Report RY0A5-2 Major Asset Register Non-Cash Disposals (LOGIS extract July 2013): RY0A5 Major Asset Disposals Breakdown Major Asset Disposals = Sold for Cash (RY0A5-1) + Non-Cash Disposals (RY0A5-2) Sold for Cash (RY0A5-1) = Assets Sold for Cash Non-Cash Disposals (RY0A5-2) = Transfer Out: Assets Issued to External Store + Assets: Destroyed or Scrapped + Assets: Donated + Assets Lost: Recovered + Assets Lost: Non-Recovered 2015 Page 41

42 Layout for Report RY0A6-1 Major Asset Register - Adjustments to Prior Period Balances (LOGIS extract July 2013): Layout for Report RY0A6-2 Major Asset Register - General Adjustments (LOGIS extract July 2013): 2015 Page 42

43 RY0A6 Major Asset Adjustments Breakdown Major Asset Adjustments = Adjustments to Prior Period Balances (RY0A6-1) + General Adjustments (RY0A6-2) Adjustments to Prior Period Balances (RY0A6-1) = +- Adjustments to Prior Period Additions +- Adjustments to Prior Period Disposals - Reclassified: Prior Period Assets to Inventory +- Reclassified: Prior Period Asset Category Corrections +- Cash: Price Increase/Decrease on Prior Period Additions +- Non-Cash: Current Period Price Corrections General Adjustments (RY0A6-2) = Non-Cash: Asset Verification Surplus +- Non-Cash: Asset Data Correction +- Reclassified: Current FY Asset to/from Inventory +- Reclassified: Current FY Asset Category Corrections +- Cash: Price Increase/Decrease on Current Period Additions +- Non-Cash: Current Period Price Corrections Layout for Report RY0A7-1 Major Asset Register - Cash Subsidiary Issues (LOGIS extract July 2013): 2015 Page 43

44 Layout for Report RY0A7-2 Major Asset Register - Non-Cash Subsidiary Issues (LOGIS extract July 2013): Layout for Report RY0A9-1 Major Asset Register - Matched Internal Transfers (LOGIS extract July 2013): 2015 Page 44

45 Layout for Report RY0A9-2 Major Asset Register - Unmatched Internal Transfers (LOGIS extract July 2013): RY0A9 Major Asset Internal Transfers Breakdown Major Asset Internal Transfers = Matched Internal Transfers (RY0A9-1) + Unmatched Internal Transfers (RY0A9-2) Matched* Internal Transfers (RY0A9-1) = Cash Transfer In: Assets Received from Internal Store + Non-Cash Transfer In: Assets Received from Internal Store - Reversals of Prior Year Assets Internal Transfer In + Reversals of Prior Year Assets Internal Transfer Out - Cash Transfer Out: Assets Issued to Internal Store - Non-Cash Transfer Out: Assets Issued to Internal Store * An asset will be a match if the ICN, serial number, unique number, transfer out price and transfer in price in an exact match Unmatched Internal Transfers (RY0A9-2) = Cash Transfer In: Assets Received from Internal Store + Non-Cash Transfer In: Assets Received from Internal Store - Reversals of Prior Year Assets Internal Transfer In + Reversals of Prior Year Assets Internal Transfer Out - Cash Transfer Out: Assets Issued to Internal Store - Non-Cash Transfer Out: Assets Issued to Internal Store 2015 Page 45

46 Layout for Report RY0M4-1 Minor Asset Register Cash Additions (LOGIS extract July 2013): Layout for Report RY0M4-2 Minor Asset Register Non-Cash Additions (LOGIS extract July 2013): 2015 Page 46

47 RY0M4 Minor Asset Additions Breakdown Minor Asset Additions = Cash Additions (RY0M4-1) + Non-Cash Additions (RY0M4-2) Cash Additions (RY0M4-1) = Cash Payment: Assets Received and paid in Current Financial Year (FY) + Cash Outstanding: Assets Received but not yet Paid + Cash Sundry: Extra Ordinary Receipt of Assets from Supplier + Cash Transfer In: Assets Received from External Store + Petty Cash: Assets Received and Paid with Petty Cash Non-Cash Additions (RY0M4-2) = Non-Cash Donation: Assets Received as Donation + Non-Cash In Kind: Assets Received for Free or Without Price + Non-Cash Transfer In: Assets Received from External Store - Non-Cash: Assets Return to Supplier - Non-Cash: Assets Return to External Store Layout for Report RY0M5-1 Minor Asset Register Disposals Sold for Cash (LOGIS extract July 2013): 2015 Page 47

48 Layout for Report RY0M5-2 Minor Asset Register Non-Cash Disposals (LOGIS extract July 2013): RY0M5 Minor Asset Disposals Breakdown Major Asset Disposals = Sold for Cash (RY0M5-1) + Non-Cash Disposals (RY0M5-2) Sold for Cash (RY0M5-1) = Assets Sold for Cash Non-Cash Disposals (RY0M5-2) = Transfer Out: Assets Issued to External Store + Assets: Destroyed or Scrapped + Assets: Donated + Assets Lost: Recovered + Assets Lost: Non-Recovered 2015 Page 48

49 Layout for Report RY0M6-1 Minor Asset Register - Adjustments to Prior Period Balances (LOGIS extract July 2013): Layout for Report RY0M6-2 Minor Asset Register - General Adjustments (LOGIS extract July 2013): 2015 Page 49